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FBI to Scrutinize NTT-Verio

Tokyo-based Nippon Telegraph and Telephone Corp.'s potential takeover of Web hosting firm Verio Inc. is being scrutinized by the Federal Bureau of Investigation.

According to the Wall Street Journal, the FBI Thursday raised national security concerns about the Japanese company's attempt to acquire the U.S. Internet service provider.

The FBI registered concerns with the Treasury Department about NTT's planned purchase of Verio because agency is concerned that foreign ownership of Verio would inhibit its ability to maintain surveillance over its telecommunications network.

NTT posted a $5.5 billion offer for Verio in May to acquire the final 90 percent of Verio it did not already own. Verio provides Web hosting and network services for about 20 percent of the Fortune 500 companies in the world.

The FBI contents that in order to protect U.S. facilities, it must be assured that only U.S.-owned companies can be used to handle domestic Internet traffic. In the past, the FBI has also insisted that the companies employ U.S. citizens to handle potential wiretapping activities.

NTT announced Friday that the Treasury Department's Committee on Foreign Investment in the U.S. would conduct a 45-day review of the planned merger.